Blackberry 2012 Annual Report Download - page 207

Research In Motion Limited
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Revenue
Revenue for the fourth quarter of fiscal 2012 was $4.2 billion, a decrease of $1.4 billion, or 24.6%, from $5.6 billion in the fourth
quarter of fiscal 2011.
A comparative breakdown of the significant revenue streams is set forth in the following table:
Hardware revenue decreased by $1.6 billion, or 36.0%, to $2.9 billion, or 68.4% of consolidated revenue, in the fourth quarter of
fiscal 2012 compared to $4.5 billion, or 80.7%, of consolidated revenue in the fourth quarter of fiscal 2011. This decrease in device
revenue was attributable to a decrease in device average sales prices compared to the fourth quarter of fiscal 2011, as well as a
volume decrease of handheld devices in the fourth quarter of fiscal 2012 compared to the fourth quarter of fiscal 2011. The Company
shipped approximately 11.1 million BlackBerry handheld devices in the fourth quarter of fiscal 2012 compared to 14.9 million
devices in the fourth quarter of fiscal 2011. The decrease in volume was attributable to increased competition in the Company’s
industry. The number of BlackBerry PlayBook tablets shipped during the fourth quarter of fiscal 2012 was 0.5 million, of which
0.1 million units were recognized as revenue during fiscal 2012 as the remaining units did not meet the criteria for revenue
recognition as outlined in the “Critical Accounting and Estimates” section of this MD&A. The revenue for the units that were shipped
in fiscal 2012 but not recognized will be recorded as revenue when all of the revenue recognition criteria are met. Also contributing to
this decrease was the impact of the BlackBerry PlayBook tablet sell-through programs that were conducted during the fourth quarter
of fiscal 2012. BlackBerry 7 product sales in fiscal 2012 were lower than expected due to competitive launches, the Q3 Service
Interruption and BlackBerry 7 product launch delays. Additionally, while the BlackBerry Bold 9900 was well received in its market
segment of full QWERTY professionals, the Company did not have a highly competitive offering in the rapidly growing market for
full-touch-based devices in the fourth quarter of fiscal 2012. The Company expects revenue in the first quarter of fiscal 2013 to show
a sequential decrease compared to the fourth quarter of fiscal 2012 based on lower unit volumes, a less favourable product mix with
lower average sales prices, and the adoption of new pricing initiatives to drive the sell-through and sell-in for BlackBerry 7 handheld
devices.
37
For the Three Months Ended
March 3, 2012 February 26, 2011
Change Q4 Fiscal
2012/2011
Millions of BlackBerry handheld devices sold
11.1 14.9 (3.8) (25.5%)
Millions of BlackBerr
y
Pla
y
Book tablets sold 0.5
—
0.5 100.0%
Revenue (in millions)
Hardware $2,866 68.4% $4,481 80.7% $(1,615) (36.0%)
Service 1,142 27.3% 898 16.2% 244 27.2%
Software
8
0
1.9% 81 1.5% (1) (1.2%)
Other 102 2.4% 96 1.6% 6 6.3%
$4,190 100.0% $5,556 100.
0
% $(1,366) (24.6%)